Reliability Report Leads to Talk of Xcel Territory Sale

Back to All News

Reliability Report Leads to Talk of Xcel Territory Sale

February 28, 2022

The Minnesota Public Utilities (MPUC) accepted the 2020 Safety, Reliability, and Service Quality reports of Xcel Energy, Otter Tail Power Company and Minnesota Power on Jan. 13. The MPUC also set company reliability standards for 2021.

In addition, responding to a concern over a decade-long reliability slide in Xcel’s Southeast Work Center and calls from the Department of Energy Resources (DER) that Xcel investigate selling portions of its territory, the MPUC took a half step: requiring the company to examine, in its current rate case, distribution system spending and maintenance in the Southeast Work Center compared to other areas of the Xcel service territory.

In their comments, Department of Energy Resources (DER) staff expressed concerns over reliability and service quality concerns in Xcel’s southern Minnesota service area.

DER staff said its analysis and “observations over the past several years suggests that the ‘business as usual’ approach” historically recommended on reliability matters is “inadequate in terms of prompting Xcel to dedicate the resources necessary to improve customer reliability metrics associated with its Southeast Work Center.”

That led the DER to begin considering other avenues for improving customer reliability for electric customers served by that work center.

The simplest alternative from its perspective, DER said, would be for Xcel to “rationalize the service territory” served by the Southeast Work Center by selling some portions of it to neighboring electric utilities.

The DER suggested Xcel model the effects of selling some portion or portions of the territory served by the Southeast Work Center in the 2021 or 2022 reliability report.

Xcel said it was “premature” to perform this analysis, but the DER continued to support its recommendation, noting that persistent reliability concerns were a driver for the sale of Alliant Energy’s Minnesota service territory in 2015.

Xcel pointed out that the Southeast Work Center is geographically its largest, spanning from portions of Yellow Medicine County—about 30 miles from the Minnesota-South Dakota border—on the west to the Minnesota-Wisconsin border on the east. The largest service center is Mankato, stretching 120 miles from Jordan on the northeast to Bergen on the southwest.

Depending on the location of the outage, the time of day, and the distance travelled it could take over two hours for the person on call to arrive at the outage location and then additional time to restore service, said Xcel.

DER said “The distances associated with the Southeast Work Center suggest that rationalizing the service territory served might improve system reliability.” However, when DER asked Xcel about that idea, the company responded that it “had not considered selling a portion of its more rural service territory to improve system reliability.”

MPUC staff said there were “other ways the Commission could require Xcel to improve reliability before considering the drastic option of requiring a sale of portions of its service territory."

Xcel further explained, “Although the reliability in more rural areas has not been as good as urban areas, we are committed to improving the reliability in these areas.”

MPUC staff noted it is unclear if selling portions of Xcel’s service territory would improve reliability for those customers without knowing the reliability performance of surrounding utilities. (For more on this topic, see the March edition of the MMUA Resource newsletter.)

Additionally, said MPUC staff, customers would be moving to utilities not regulated by the state and could have other changes that would impact them, such as changes in rate structures or access to utility rebates and programs.

Thank You, Annual Sponsors

View all Annual Sponsors

Hometown Connections Helps MMUA Members

Hometown Connections is an American Public Power Association subsidiary that provides products and services designed to help municipal utilities meet today's new and pressing industry challenges. MMUA is a Hometown Connections Affiliate.

For information on AMI, operations, cyber-security, business strategy, customer care, finance and workforce issues, click on the Hometown Connections logo!